What is the role of credit score in determining home loan eligibility?

Your credit score plays a crucial role in home loan eligibility and has a direct impact on the loan amount.

Financial institutions will check your CIBIL score or credit report before approving a home loan. A higher credit score indicates that you have been a responsible borrower in managing your finances and repaying past debts.

A score above 750* is considered excellent and improves your chances of getting a home loan easily. Scores between 700 and 750 are good, 650 and 700 are average, and below 650 indicates high risk. Though, many reputed banks and NBFCs may offer loans to applicants with a credit score lower than 650*, depending on their policies and other factors.

Applicants with low scores may have to make extra efforts, provide collateral, or pay higher interest rates. Those with no prior loans should build a credit score through credit cards.

Besides the number, financial institutions also consider your credit history, types of loans availed, repayment track record, average credit utilisation, etc., when assessing eligibility.